Kingfisher should revive for employees, passengers: Ajit Singh

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Last Updated: Thu, Jan 03, 2013 04:12 hrs

With uncertainty over the revival of Kingfisher Airlines, Civil Aviation Minister Ajit Singh on Wednesday said the airline should present a satisfactory operating plan to the Directorate General of Civil Aviation ( DGCA), and work on its rescue plans for the sake of its employees, stakeholders and passengers. He also pointed out the airline had not renewed its licence which expired on December 31.

"They don't have a licence today. If they decide to operate today then the rule says, they don't have to go through paperwork which a new operator has to. All they have to is present a satisfactory operating plan to the DGCA who would ensure financial stability before being allowed to fly," he said.

"If they don't fly again there will be collateral damage," he said. According to estimates, banks, which have lent about Rs 7,000 crore to the airline, could be hit. Kingfisher also owes airports about Rs 250 crore. Various oil companies, too, haven't paid by the now defunct airline.

The cash-strapped airline ceased operations on October 20 last year after it failed to pay employees’ salaries for eight months. The airline has about 4,000 employees on its rolls. Asked about if his ministry was mulling over an intervention for the sake of employees, Singh said, "We sympathise to them but the ministry can't do anything about payment of their due salary, may be the labour ministry could do something."

New aviation policySingh also said a new policy to encourage airlines to fly to smaller cities and make regional air connectivity commercially viable was likely to be ready in three months.

"The civil aviation ministry is coming up with a new route dispersal policy to establish better air connectivity to small cities, which would include various measures to encourage airlines to begin operations to such places," he said.

A consultant, hired to prepare a draft of the policy to promote regional air connectivity, will submit its report by January 31. "We hope to be able to have some policy in place in about two months after this report is submitted. The idea is to make these (flying) operations more commercially viable," the minister said during an informal interaction with reporters.

Noting that the existing route dispersal guidelines which make it mandatory for airlines to fly to northeastern states, Jammu & Kashmir and Andaman & Nicobar Islands had many loopholes, he said while these loopholes would be plugged, it was unlikely that the existing sops provided to airlines to improve regional connectivity would be done away with.

"We want airlines to fly to small cities. We know that operating an airline is a costly affair. So they want to have only one type of aircraft as it reduces the operational costs. Hence, they need to be encouraged to also acquire smaller planes to fly to tier-II and tier-III cities," Singh said.

The new policy would provide ways to cross-subsidise these operations by the airlines flying to such destinations.

To promote regional connectivity, the present rules stipulate that airlines operating small aircraft like turboprops, with seating capacity upto 70 passengers, are provided jet fuel at a uniform rate of sales tax of four per cent.

Taxes on the fuel otherwise range from four to 30 per cent across different states. The high sales tax rates and high domestic cost of jet fuel leads to fuel costs accounting for 40-45 per cent of the total operating cost of airlines.